Drought Aid Now, Yes, But . . .

August 02, 1988

For farmers hurt by the drought, Christmas will come early this year. Washington is on its way to sending them a multibillion-dollar relief package. The only question is just how generous an election-conscious Congress will be in doling out the goodies.

But relax, taxpayers. In an ironic twist of America`s distorted, exorbitant agricultural policy, you probably won`t have to pay any more than you would have in a year of ample rain. Because unless they get really carried away in satisfying special interests, the lawmakers` largesse will be paid for by the drought itself.

Congress already had budgeted about $10 billion for deficiency payments to farmers. These payments normally make up the difference between government- guaranteed target prices and market prices, and help farmers maintain income when demand is depressed. The severity of the drought, however, has reduced supplies of some commodities, driving up prices and lessening the need for support payments. By some estimates, the savings could be as much as $7 billion.

That money could be quickly eaten up, however, by the drought-relief bills passed last week by the House and Senate. Both measures would give disaster assistance up to $100,000 to farmers who have lost more than 35 percent of their crop to the drought. Those nearly wiped out would get supplemental payments. In addition, many dairy and livestock producers would receive aid to help pay for higher feed costs.

The differences in the bills should be resolved in conference committee in the next week or two. Depending on the negotiations and how many special-interest amendments can be stripped from the bill, the legislation could cost anywhere from $4 billion to more than $6 billion. With a price tag in that range, lawmakers proudly boast that it will be the largest relief program for a natural disaster in history.

Of course, no one likes to see any businessman wiped out by a flood, tornado or fire, but most entrepreneurs protect themselves against such disasters with insurance. Since 1938, the Federal Crop Insurance Corp. has offered insurance to farmers against crop losses due to floods, drought, hail and other natural hazards. Although the government offers to pay 30 percent of the premium, only a quarter of the eligible cropland is insured.

Some farmers haven`t insured because they irrigate or because they diversify their crops. Most haven`t bought insurance because they know that Washington can be counted on to bail them out, especially in times of emergency. Two years ago when the Southeast seared and the Midwest flooded, the government covered half of the farmers` losses even if they had no insurance. During the Reagan years, with much of American agriculture mired in a depression, farm outlays in general rose from about $4 billion in fiscal 1981 to a peak of $26 billion in fiscal 1986.

Before the drought struck this year, struggling farmers were getting back on their feet and the Reagan administration was moving toward its wise goal of reducing, and eventually ending, farm subsidies. The drought has done severe damage, and no one expects drought-stricken farmers to dry up and blow away with their crops. At some point, however, they must wean themselves from their welfare system and begin to stand on their own.

At a minimum, they should be required to insure themselves against further disasters in order to qualify for this relief. The House bill would require farmers to buy insurance for the next two years in order to qualify for disaster assistance. That`s a start. Farmers have to learn that Washington won`t bail them out forever.